Key agreements on energy and connectivity ready for signing during Nepal PM’s India visit

Kathmandu: Nepal Prime Minister Pushpa Kamal Dahal will visit India from May 31 to June 3 at the invitation of Prime Minister Narendra Modi.

This will be Dahal’s first bilateral trip after assuming office in December 2022, following the established tradition of the Nepali Prime Minister visiting India first.

Nepal’s Ministry of Foreign Affairs and India’s Ministry of External Affairs (MEA) confirmed Dahal’s India visit on Saturday.

According to Nepal’s Foreign Ministry, the Prime Minister will be accompanied by his daughter Ganga Dahal while his entourage will comprise ministers, secretaries, and senior officials of the government of Nepal.

This is the fourth visit of Prime Minister ‘Prachanda’ to India as the Prime Minister of Nepal. “The visit will further strengthen the age-old, multifaceted, and cordial relations between Nepal and India,” said the statement.

India’s MEA said that the visit continues the tradition of regular high-level exchanges between India and Nepal in furtherance of India’s ‘Neighbourhood First’ policy.

“The bilateral relations between the two countries have significantly strengthened in the last few years in all areas of cooperation. This visit underscores the importance given by both sides in adding further momentum to the bilateral partnership,” the ministry said.

According to Nepal’s Foreign Ministry, Prime Minister Dahal will hold delegation-level talks with Prime Minister Modi at the Hyderabad House on June 1. “The talks will be followed by a joint press meet by the two Prime Ministers,” it said.

Prime Minister Dahal is scheduled to pay a courtesy call to President Droupadi Murmu and Vice-President Jagdeep Dhankhar. He will also address Nepal-India Business Summit in New Delhi jointly organised by the Federation of Nepalese Chambers of Commerce and Industry and the Confederation of Indian Industry (CII).

Dahal is scheduled to visit Ujjain and Indore in Madhya Pradesh before returning to Kathmandu on June 3. During his stay in New Delhi, he is also scheduled to interact with the Nepali community in India.

The Foreign Ministry officials in Nepal told IndiaNarrative.com that the visit was earlier being planned in mid-April but the domestic political environment on both sides delayed it.

While PM Modi was busy with the Karnataka elections, the Nepal government is scheduled to present its budget for the next fiscal on May 29. Dahal will depart for India after Nepal’s annual budget is presented.

The signing of some agreements, a Memorandum of Understanding (MoU), and a groundbreaking ceremony are expected after delegation-level talks between both PMs on June 1.

Officials from different ministries and agencies involved in preparing the agenda for the visit in Kathmandu told IndiaNarrative.com that agreements will be signed in the field of energy, trade, land, and transport sectors.

The signing of a 25-year ‘Intergovernmental Agreement for Power Transfer from Nepal to India’ is key on Kathmandu’s agenda. A senior official of Nepal’s Ministry of Energy, Water Resources and Irrigation said that not only would the deal guarantee a market for Nepal’s power for a long duration but also help in attracting domestic and foreign investment in the country’s hydropower sector.

Nepal had proposed the agreement during the 10th Secretary-level meeting of the Joint Steering Committee on Energy Cooperation in India this February.

Nepal’s state-owned Vidyut Utpadan Company Limited (VUCL) will also sign an MoU with India’s NHPC Limited to jointly build the 480MW Phukot Karnali Hydropower Project in western Kalikot district, revealed an official from the Energy Ministry.

Both Prime Ministers are also scheduled to lay the foundation stone of the 400KV Butwal-Gorakhpur Cross-Border Transmission Line, a joint project of the Nepal Electricity Authority (NEA) and the Power Grid Corporation of India.

“A joint venture company established in India has already hired a contractor to construct the transmission line on the Indian territory,” said Dirghyu Kumar Shrestha, chief of the transmission directorate at the NEA.

Inauguration of the New Modi-Lekhnath Transmission Line in western Nepal, which has been constructed with the assistance of the Exim Bank of India, will also take place during the PM’s India visit.

The NEA and India’s Madhyanchal Vidyut Vitaran Nigam Limited have also been holding negotiations for the sale of Nepal’s 200 to 500 MW power to the Indian company under a 5-7 year agreement. “There is a possibility of signing an agreement on the matter,” said an NEA official.

When it comes to the transport sector, the Indian side will hand over the new 17-km expanded railway line to Bijalpura from Nepal’s Kurtha, an official of the Ministry of Physical Infrastructure and Transport said.

This is the extended part of the Jayanagar to Kurtha railway line which will be extended further to Bardibas in Nepal. Being built with Indian assistance, the passenger railway line is currently under operation from the Indian border town Jayanagar to Kurtha.

The Indian company undertaking the Detailed Project Report (DPR) of the proposed Raxaul-Kathmandu Railway is likely to share the DPR of the project during PM Dahal’s visit, according to the official. Konkan Railway Corporation Limited is undertaking the DPR. “We have been notified that DPR has been completed,” said the official. The proposed railway has been described as a direct rival to China’s proposed Kerung-Kathmandu Cross-Border Railway.

Nepal’s media reported that more agreements could be signed during Dahal’s visit. The Kathmandu Post reported that signing an agreement on the construction of a motorable road in Chandani-Dodhara bordering Nepal’s Sudur Paschim province and India’s Uttarakhand and signing of another agreement for a cross-border digital payment system is also in the pipeline.

The digital payment system is expected to boost trade and tourism by eliminating currency-related hassles. The accord will allow Indian tourists in Nepal to make digital payments using Indian e-wallets like BharatPe, PhonePe, Google Pay, and Paytm.

During the visit, Nepal PM also wants to reach a certain understanding on revising the Nepal-India Treaty of Transit which was automatically renewed in 2020. “We want to remove procedural delay further with revision in the treaty,” a senior official of Nepal’s Ministry of Industry, Commerce and Supply told the India Narrative.

Likewise, according to Nepali media reports, there is also a plan to sign a pact on building a petroleum pipeline from Siliguri in West Bengal, India to Charali, Jhapa, bordering district of Nepal and extending the existing Motihari-Amlekhgunj pipeline to the Lothar, Chitwan in the western side of the southern plain.

Nepali officials said that even though it is not a major issue, the boundary dispute would also be on Nepal PM’s agenda.

There are boundary disputes between Nepal and India particularly over Kalapani, Lipulekh, and Limpiyadhura, which are currently being administered by India

Speaking in Parliament on May 19, Prime Minister Dahal said that the Nepali government would prepare to settle the boundary dispute through diplomatic initiatives.

“Our policy and principle is that all issues related to the boundary dispute with neighbours should be resolved through diplomatic talks and the government’s policy is to strengthen and deepen ties with neighbours,” said Dahal.

Nepal’s foreign policy experts say that the planned signing of major agreements with India in the areas of hydropower development, power exports and various connectivity projects suggests that bilateral relations have improved markedly between the two sides since distrustful relations just a few years ago when both sides issued boundary maps incorporating the disputed region of Kapapani, Limpiyadhura and Lipu Lekh in 2020.

“My impression from planned agreements between the two countries and my interactions with people close to Prime Minister Dahal is that he wants to do something in Nepal by building strong political trust with India during his upcoming India visit,” said Vijay Kanta Karna, Nepal’s Former Ambassador to Denmark.

“The Prime Minister appears to believe that only by building political trust with India, diplomatic and economic interests of Nepal could be served,” Karna told IndiaNarrative.com on Saturday.

Arun Subedi, former policy advisor to Former Prime Minister Sher Bahadur Deuba said that building good relations with India is crucial in serving Nepal’s national interests.

“Nepal’s national interest lies in building good relations with the country with which it has good cultural, economic and maritime connectivity,” he said.